Why do most entrepreneurs fail in the initial 5 years?
Have you ever wondered why most businesses fail in the initial days of their lifecycle and why do others succeed?
So, before starting the topic, Let me share my own start-up story, Young college grades, we saw an opportunity and right after, we jumped in due to our technical expertise and believe in our idea. At first, it felt extremely wonderful to work on our idea; doing everything in it. As we start to execute it, we have to manage people and delegate our task to two employees. But one day suddenly everything turns into a nightmare. We have to manage our product; people and competition, our operation. Even if everything we had managed at first (as we felt like), After a year and few month of operation, we started getting complaints from a customer, as new employees are not managing task as we thought of, after that we started the process of hiring & firing, multiple changes in operation flow and many others things. Our cost started to shoot up and due to all the mismanagement, our service quality become poor, and eventually customers start to fade away. We have to close it with tones of losses.
This article contains 8 business structural points that can help you to operate your startup business in a much better way and also helps to avoid the common errors & mistakes which most people keep on doing unknowingly.
1 We started our business on the wrong assumption, that “Having an idea and technical expertise only is good enough for a successful business.” However, in reality, having a product or service expertise and managing a business effectively are completely two different skillsets. That is both skills you have to learn for running a business.
So here, is the story people can relate to. Once you master some skill, you want to work on your own and once your entrepreneur comes out in the real world. Then you get to realise, it is not just a product or service you have to manage, you have to manage all the operations, people, sales and finance and keep on improving on all the fronts as long as it becomes self-sustainable & profitable without your much of involvement.
2 if you want to have a successful business, you have to plan it from the beginning even before starting it. Assuming it will eventually grow. Therefore, you have to have a broader perspective, where who define the business structure and the processes to run it. Always ask how business can run as a whole in your absence. The business model helps to structure your processes. starting right from procuring/developing a product, knowing customers, and product delivery model.
3As everything starts with you, your personality type. Being in the entrepreneur journey. You must be already having one key skill, either you are a techy or a manager or both. As a Manager personality type, You like to optimise the entire essential or As a techy, you are too focused on the product/service improvement. On average, a Person is 80-90% techy, 10% manager, which put the odds of success in your against. So how could someone turn the odds in his/her favour?
You need to have both skillsets at the initial stage as you keep on working.
There is a common saying, Only 1% of businesses turn out to be successful. . There could be many reasons as we discussed above for it, but one can change the way they operate the business and drastically improve your chances of being successful. Anyway, You are working on your business day to day basis. but here, if you start to think in a way that you are creating a business that you have to sell to some common guy, A guy, who don't know anything but just looking for something that works.
if you start to think and work in that direction, A business that you are developing to provide a franchise in the future. It forces you to keep documenting each & every process flow, organisation structure, & everything essential for someone else. How things should be if I want to hand over my business to others or employees.
The benefit of having franchise model thinking, its success rate is 75% compared to ordinary business model planning where the failure rate is more than 80% . Here, You are developing a business, which will be ready to operate for a buyer, which means a profitable business model for expansion.
4Always try to design your operation in the simplest possible way that easy for an employee to learn the process and same time motivate an employee to improve it.
5Start a business that satisfies your primary life goal. What do you care about the most, how much money you really want, how much I want to travel etc. This strategic tool, it helps you to make a goal for your business.
6 Organisation chart. Each employee is important for a specific task and everything about it must be documented for knowledge transfer. Like. What they have to work, how to work and whom should they report and how their work will be evaluate based on pre-set standards and their employment contract.
7 Do not rely on or keep looking for the great employee but rely on the great people management system. It includes the way you treat your employees and the way you let them work. A system where people understand why they are doing that work, Once they understood your idea, they work passionately to improve the product and service.
8 Always keep on improving your product and service as per customer needs & requirements, Keep tweaking & testing your product and operations, Keep on doing it scientifically, Using the SMART model (Simple, Measurable, attainable, realistic and timely). It helps to innovate your business processes.
This article's key insight is to work on your business, not in the business and keep on working to develop a successful prototype of your business for others buyers. It indirectly helps you to develop a scalable business.
If you want to learn more about it. you should read the book The E-Myth Revisited by Michael E.Gerber.
